The Effects of Extrinsic Cues on Olive Oil Price in Brazil

Over the past two decades, world olive oil consumption registered an impressive growth. Although olive oil consumption remains concentrated in the main producer countries surrounding the Mediterranean Sea (“traditional” markets), it is also growing rapidly in many other countries all over the world, where olive oil is still largely perceived as a novelty food (“nontraditional” markets). This study focuses on the Brazilian market of olive oil, which is one of the most important nontraditional markets in terms of both its dimension and growth rates. A hedonic price model has been used to evaluate whether, and to what extent, extrinsic cues impact on the retail price of olive oil. Data were collected via direct observation of several e-shops where Brazilian consumers could purchase olive oil. Results show that the retail price of olive oil is highly influenced by extrinsic cues such as branding, labeling, and packaging.     

Modelling non-performing loans probability in the commercial banking system: efficiency and effectiveness related to credit risk in Italy

In this article, we model the effect of the non-performing loans on the cost structure of the commercial banking system. With this aim, we comment on an increase in the non-performing loans by studying the consequences of such a change on the cost function and compute the probability of failure of maintaining a performing loan as such. In doing so, we are convinced that geography does matter and evaluate the risk propensity of the bank towards the non-performing loans accordingly. We finally stress that traditional efficiency indicators of cost elasticity do not fit properly with such a problem and propose a measure based on the costs for managing and monitoring the loans which, according to the related density function, will reveal effectively as non performing.     

A Theory of Dividends Based on Tax Clienteles

This paper explains why some firms prefer to pay dividends rather than repurchase shares. When institutional investors are relatively less taxed than individual investors, dividends induce "ownership clientele" effects. Firms paying dividends attract relatively more institutions, which have a relative advantage in detecting high firm quality and in ensuring firms are well managed. The theory is consistent with some documented regularities, specifically both the presence and stickiness of dividends, and offers novel empirical implications, e.g., a prediction that it is the tax difference between institutions and retail investors that determines dividend payments, not the absolute tax payments.     

A Statistical Approach to Assess Referendum Results: the Venezuelan Recall Referendum 2004

This article presents a statistical approach to assess the coherence of official results of referendum processes. The statistical analysis described is divided in four phases, according to the methodology used and the corresponding results: (1) Initial Study, (2) Quantification of irregular certificates of election, (3) Identification of irregular voting centers and (4) Estimation of recall referendum results.
The technique of cluster analysis is applied to address the issue of heterogeneity of the parishes with respect to their political preferences.
The Venezuelan recall referendum 2004 is the case study we used to apply the proposed methodology, based on the data published by the "Consejo Nacional Electoral" (CNE-National Electoral Council). Finally, we present the conclusions of the study which we summarize as follows: The percentage of irregular certificates of election is between 22.2% and 26.5% of the total; 18% of the voting centers show an irregular voting pattern in their certificates of election, the votes corresponding to this irregularity are around 2,550,000; The result estimate, using the unbiased votes as representative of the population for the percentage of YES votes against President Chávez is 56.4% as opposed to the official result of 41%.     

Dietary vs. transport: an analysis of environmental burdens pertaining to a typical workday

This article deals with an evaluation of some environmental impacts of a normal workday. The aim is to compare the environmental load associated to different standard meals provided by a canteen, and a series of transport options from home to the workplace, adopting the life cycle assessment (LCA) methodology. LCA is a holistic methodology that evaluates the environmental burdens associated to industrial productions or anthropic activities, over the whole life cycle of a product. The environmental load associated to a service is characterized by a number of impact indicators internationally accepted, such as gross energy requirement, global warming potential (GWP), ozone layer depletion and others. The present paper shows the environmental impacts, calculated with the environmental product declaration and the cumulative energy demand methods, associated to some typical food courses and means of transportation. The present analysis considers as subject a generic worker who lives and works in a European urban area. The results highlight how often environmental impacts coming from the lunch, in particular when the menus contain meat, are higher than the ones attributable to the transport. Taking into account the GWP as example, this study assesses how the contribution for producing a single beef steak (120 g) is equivalent to drive a car for ca. 30 km.     

Assessing Project Risk

Finding the appropriate discount rate, or cost of capital, for evaluating investment projects requires an accurate estimate of project risk. This can be challenging because project risk cannot be estimated directly using the CAPM, but must instead be inferred from a set of traded securities, typically the equity betas of comparable firms in the same industry. These equity betas are then unlevered to undo the effect of comparable companies' financial leverage and obtain estimates of “asset” betas, which are then used to estimate project risk. The authors show that asset betas estimated in this way are likely to overestimate project risk. The equity returns of companies are risky not only because of their existing projects but also because of their growth opportunities. Such growth opportunities often include embedded “real options,” such as the option to delay, expand, or abandon a project. Because such real options are similar to leveraged positions in the underlying project, a company's growth opportunities are typically riskier than its existing projects. Therefore, to properly assess project risk, analysts must also unlever the asset betas derived from comparable company stock returns for the leverage contributed by their growth options. The authors derive a simple method for unlevering asset betas for growth options leverage in order to properly assess project risk. They then show that standard methods for assessing project risk significantly overestimate project costs of capital—by as much as 2–3% in industries such as healthcare, pharmaceuticals, communications, medical equipment, and entertainment. Their method should also be applied to stock return volatility to derive project volatility, an important input for determining the value of a firm's growth opportunities and the appropriate time for investing in these opportunities.     

International lending of last resort and moral hazard: A model of IMF's catalytic finance

This paper analyzes the trade-off between official liquidity provision and debtor moral hazard in international financial crises. In the model, crises are caused by the interaction of bad fundamentals, self-fulfilling runs and policies by three classes of optimizing agents: international investors, the local government and an international official lender. Limited contingent liquidity support helps to prevent liquidity runs by raising the number of investors willing to lend to the country for any given fundamentals, i.e., it can have catalytic effects. The influence of the official lender is increasing in the size of its interventions and the precision of its information. Unlike the conventional view stressing debtor moral hazard, our model identifies circumstances in which official lending actually strengthens a government's incentive to implement desirable but costly policies.     

Implementation of optimal contracts under adverse selection

This paper studies a 2-agent, 2-type principal-multiagent model of adverse selection under the assumption that the agents each have complete information. We construct a mechanism implementing the first-best contracts in Nash equilibrium that: satisfies a condition related to individual rationality, is renegotiation-proof, has a small-sized message space, achieves unique implementation and satisfies undomination of Nash equilibrium strategies. Moreover, we prove that other requirements which relate to individual rationality (different from the one satisfied by our mechanism) are not compatible with implementation of the first-best contracts. Received: 27 July 1998 / Accepted: 26 May 2000